You put down 20% on a home with a purchase price of $300,000. The down payment is thus $60,000, leaving a balance owed of $240,000. The bank will loan you the remaining balance at 4.28% APR. You will make annual payments with a 20-year payment schedule. What is the annual annuity payment under this schedule?
A) $18,100.23
B) $22,625.29
C) $12,000.00
D) $33,785.23

Question

Quizplus · Accepted Answer

The correct answer is A. The annual annuity payment under this schedule is $18,100.23. This can be calculated using the formula for the present value of an annuity, which is:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present value of the annuityPMT is the annual annuity paymentr is the annual interest raten is the number of yearsIn this case, the present value of the annuity is $240,000, the annual interest rate is 4.28%, and the number of years is 20. Plugging these values into the formula, we get:$240,000 = PMT * [1 - (1 + 0.0428)^-20] / 0.0428PMT = $18,100.23

You Put Down 20% on a Home with a Purchase